U.S. energy companies kept the oil rig count unchanged this week, Baker Hughes, a GE company, said Dec. 22, even though crude prices hovered near their highest level since the summer of 2015.
The rig count, an early indicator of future output, held at 747 in the week to Dec. 22, still much higher than a year ago when only 523 rigs were active after energy companies boosted spending plans for 2017 as crude started recovering from a two-year price crash.
The increase in U.S. drilling lasted 14 months before stalling in August, September and October as some producers trimmed their 2017 spending plans after prices turned softer over the summer. Energy firms started adding rigs again in November as crude prices rose.
So far in 2017, U.S. crude futures have averaged about $51 per barrel, easily topping last year’s $43.47 average. This week, futures traded at about $58 per barrel, putting them close to their highest since June 2015.
Looking ahead, futures were trading at $58 for the balance of 2018 and $55 for calendar 2019.
In anticipation of higher prices in coming years, U.S. financial services firm Cowen & Co. said 21 of the roughly 65 E&Ps they track have already provided capex guidance for 2018 indicating a 13% increase in planned spending over 2017.
Cowen said the E&Ps it tracks said they would spend about $66.1 billion on drilling and completions in the lower 48 U.S. states in 2017, about 53% over what they planned to spend in 2016.
Cowen, which has its own U.S. rig count, said it expects a gradual decline in the count in fourth-quarter of 2017 and in 2018.
Analysts at Simmons & Co., energy specialists at U.S. investment bank Piper Jaffray, this week slightly reduced their forecast for the total oil and natural gas rig count to an average of 876 in 2017, 999 in 2018 and 1,127 in 2019. Two weeks ago, it forecast 876 in 2017, 1,001 in 2018 and 1,128 in 2019.
There were 931 oil and natural gas rigs active on Dec. 22. The average number of rigs in service so far in 2017 was 875. That compares with 509 in 2016 and 978 in 2015. Most rigs produce both oil and gas.
U.S. shale oil production is expected to rise for a 13th consecutive month to a new record in January, the U.S. Energy Information Administration said.
Overall, U.S. production is expected to rise to 9.2 million barrels per day (MMbbl/d) in 2017 and an all-time high of 10.0 MMbbl/d in 2018 from 8.9 MMbbl/d in 2016, according to a federal energy projection in December.
U.S. output peaked on an annual basis at 9.6 MMbbl/d in 1970, according to federal energy data.